People's Democracy

(Weekly Organ of the Communist Party of India
(Marxist)

Vol. XXXV

No.
34

August
21,
2011

Towards a Democratic Regulation

Of the Mineral Sector

Archana
Prasad

THE mineral sector has been under the
monopoly control of the union government and has been facing several
challenges, least of which arise out of the rapid and ill conceived
policy of the
liberalisation of the sector. Its problems have been well highlighted
in the
report on illegal mining by Justice Santosh Hegde which resulted in the
resignation of the Karnataka chief minister. The report not only
highlighted the
lethal corporate-politician nexus behind illegal mining, it is also a
revelation on the different aspects of the sector which need strict
regulation.
Some of these aspects include the question of mineral transportation,
stock
yard permissions and the methods of continuous monitoring that detect,
record
and punish rampant illegal mining. At the same time the growing
conflicts in
areas where land acquisition is taking place for mining have forced the
State
to revise its Mines and Minerals (Development and Regulation) Bill 2010
to consider
the sharing of benefits with local people. The revised Bill of 2011
(which is
yet to be introduced in parliament) reportedly proposes that 26 per
cent of the
royalty from profits of coal mining and royalty from operational mines
of all
other minerals will be shared by local people. The debate over the
nature and
quantum of benefit sharing assumes that beneficiaries will have no
objection to
corporate mining if they receive adequate long term benefits from it.
This idea
has been endorsed by some prominent environmentalists who see the long
term
local share in profits as a natural resource rent to the people who
live in the
mineral rich areas. While this is an important aspect of the debate, we
need to
take a more holistic view about the challenges facing the sector if a
people-oriented legislation is to be put in place.

SOCIAL CONTROL

OVER EXTRACTION

The question of benefit sharing and
regulation has to be seen in the context of rapidly changing character
of the
mining sector. The introduction of private capital in mining and
increase in
profit mining has been evident in the last five years. The intervention
of
private mining companies has also led to a qualitative change in the
scale of
illegal mining. The case of iron ore mining illustrates the point. In
reply to
a starred question in Rajya Sabha, the minister of state for mines put
forth a
statement that only 190 mining leases were granted to central public
sector
units between 2003 and 2011, while in the same period about 9967 mining
leases
were given to private sector companies. Not surprisingly the
Congress-ruled
states of Andhra Pradesh and Rajasthan topped the list of the states
with
private companies, with Gujarat
following
suit. This was accompanied by the threefold increase in foreign direct
investment in the sector. In reply to another question, the minister
stated
that such investment had gone up to Rs 1785.04 crore between 2008 and
2011.

But the growth of private companies does
not reveal the true picture about the nature of extraction in the
sector. The
legal licences granted to private companies were accompanied by the
equivalent
if not higher extraction from illegal mining. The figures before
parliament are
instructive. A total of 36,677 violations were recorded in 2006 and
this figure
went upto 82,330 cases in 2010. This showed that private companies had
increased their rate of extraction beyond imaginable limits. This
increase is
also a result of the lack of social control over any type of mining
operations,
a fact reflected in the Bill of 2010, which is the last public version
of the
proposed law for the sector. The Bill ignores the lessons of the
Lokayukta
report which points to the lack of records or local monitoring systems
of
illegal operations and stockpiling as the main reasons for the
leakages. It
hardly sets up any local structures that can monitor and report illegal
mining
on a daily basis. Perhaps it is time that the Indian administrators
learnt from
other countries like Canada
and Australia
where local self and regional governments make their own mining rules
and where
recognised ‘aborigine councils’ in mineral rich areas could make their
own
rules to curb and monitor mining activities. Hence the overall mining
regulation in Canada
lays down a framework for the role of the local self and regional
governments
in monitoring mining operations. In the process those impacted by
mining will
find a voice in keeping a vigil over daily mining operations, and also
find a
forum to register their complaints, thus increasing the social control
over the
sector.

THE NATURE

OF BENEFITS

The question of benefits and beneficiaries
is also linked to the issue of social control over corporate mining.
The
returns in the form of royalty for minerals other than coal amounted to
Rs 2610
crore in 2010-11 and this had declined sharply from Rs 3997.42 crore in
2009-2010. In some states like Maharashtra
and
Rajasthan the decline in royalty is seen from 2008 onwards. This means
that a
large extraction of minerals was taking place outside the formal
system,
leaving it out of the benefit sharing mechanism. It is therefore not
surprising
that the minister of mines, when asked in the Rajya Sabha, could not
provide
any information on whether 20 per cent of the proceeds from mining
royalty were
spent for the development of mining areas. The question of benefit
sharing is
therefore intimately linked with structures ensuring compliance and
checking
illegal mining. At the same time the question of benefits has to be
seen in
more than monetary terms. Mining affects health of people and material
conditions (land, water, soil, biodiversity etc) of the surrounding
villages.
Is the amelioration of these factors and upgradation of the ecological
infrastructure a part of the scheme of rehabilitation of the
surrounding villages?
If a mechanism is to be created for achieving this objective, then a
development fund needs to be created out of mining returns. With the
rapid
growth of corporate capitalism in the mining sector it is not enough to
simply
speak of long term shares in profits. While this might be a step in the
right
direction to establish the principal of ‘natural resource rent’, it
will not
ensure the long term livelihood security of those living in mineral
rich areas.
This can only be done if the State ensures corporate compliance in
eco-restoration of the area in the long term.

INTEGRATED

FRAMEWORK

A third aspect that needs to be considered
is that in India,
the scope of mining regulation is very narrow. Current legislation
largely
covers only those activities like reconnaissance, prospecting and
mining
licenses which are connected with site level mining operations. All
other
aspects like environment clearances and land acquisitions are
independent from
this process of granting mining leases. Once a company gets a mining
licence,
it can apply for environmental clearance and once this clearance is
got, the
acquisition process begins. These processes are largely independent
from each
other and involve multiple agencies. Hence a project like POSCO may get
conditional environmental clearance without a transparent and socially
just
land acquisition process. It is therefore important to think of a
regulation
that interlinks the process of land acquisition, environmental
clearance and
granting of mining leases. Here too, it is possible to learn from the
developed
countries whose laws for impact assessments and acquisition are sector
specific. Thus a mining regulation incorporates the provisions relating
to
recognition of claims and rights, environmental impact and regulation
of
storage, transportation and other provisions, all in the same law. At
the same
time impact assessments have clear provisions for the involvement of
local self
governments, right from the stage of the screening of the project. It
is
therefore important to ask whether it is possible to introduce an
element of
‘informed consent’ not only in impact assessment and acquisition but
also for
reconnaissance and prospecting as both these activities show the intent
of
mineral extraction. Getting consent of those affected by mining
operations at
every stage should be a structured and continuous process and rather
than a one
off event as is envisaged in current policies and laws of acquisition
and
clearance. It is another matter altogether that the question of social
control
and consent is ignored in all mining regulations that exist at present.

It is difficult to say whether such
provisions will contribute towards lessening the conflicts arising out
of
corporate mining leases. But they will certainly start a process of
democratic
decision making in the mining sector itself. Hence the provisions of
PESA (Panchayats Extension to Scheduled Areas Act)
may be used and
suitably amended to set up monitoring structures at the panchayat
levels. At
the same time the convergence between local forest administration and
panchayats also needs to be strengthened in order to ensure that
illegal
operations are checked. This is particularly important because there
are very
few instances where outright violations were a result of large
encroachments.
Rather most violations were done by companies who already have mining
rights
but are exceeding their permissible limit. Hence there are cases of
over-extraction,
stockpiling and illegal transportation, the most prominent of which
came to light
after the Supreme Court banned all mining of iron ore in Bellary
district. The question is that if
such violations are rampant because of the ruling class-mining mafia
nexus,
then the only way of checking such acts is by ensuring compliance
through increased
social control of elected institutions.